Weak tablet market affects Corning Inc.

Corning Inc., its headquarters seen here in this aerial photo, miscalculated how much the tablet market would grow, Chief Financial Officer James Flaws said in a conference call with analysts.
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The company's Gorilla Glass is used in tablets and smartphones made by Samsung, Acer, HTC, Lenovo and others, according to Corning's website. This month, Samsung reported that sales of its tablets and smartphones weakened because of increased competition.

Corning miscalculated how much the tablet market would grow, Chief Financial Officer James Flaws said in a conference call with analysts.

"We just got that really wrong about what was happening in the tablet market," he said.

The company said net income fell to $169 million, or 11 cents per share, from $638 million, or 43 cents per share, in the same quarter a year ago.

Earnings, adjusted for non-recurring costs, were 37 cents per share. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 37 cents per share.

Revenue rose 25 percent to $2.48 billion from $1.98 billion in the same quarter a year earlier. That was below the $2.53 billion analysts expected, according to Zacks.

Shares of Corning fell $2.05, or 9.3 percent, to $20 on Tuesday. Its shares had been up almost 24 percent so far this year through Monday's market close.

Company officials focused on the positive in meetings Tuesday with area media.

"We were strong in display, environmental technologies and optical communications," said Tony Tripeny, Corning Inc. senior vice president and corporate controller. "We don't often talk about them. It's just a good reminder of why it's important to be a balanced company. As we look ahead, we're confident of an eighth consecutive growth quarter."

The slow sales of Gorilla Glass was a fluctuation that was hard to predict, said Dan Collins, vice president of corporate communications.

"We just make the glass. We don't make the devices," Collins said. "It's difficult to answer why did the retail demand for a device go up or down. We respond to the retail market, whether it's up or down."

Individually, display technologies saw core sales of $1.1 billion in the second quarter, up 62 percent from a year ago. Core earnings were up 9 percent over the second quarter of 2013.

Environmental Technologies had a record quarter of $285 million in sales, up 25 percent from last year. Optical communications sales were up 14 percent at $686 million, driven mostly by stronger-than-expected demand for fiber-to-the-home.

"We've said fiber-to-the-home would eventually become a dominant player," Collins said. "We're really starting to see that."

Life sciences saw sales of $223 million, up 2 percent over the same time last year.

Company officials said they believe Gorilla Glass sales will bounce back and other divisions will continue to thrive.

"We're seeing some nice growth in the display business. We feel very good about that," Tripeny said. "We expect growth to continue in environmental technologies and optical communications."

The Associated Press and staff writer Jeff Murray contributed to this report.